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Week 11 - March 17th - 2003 |
David
Seaton's Energy Links® Editorial "Life
with Murphy", "Murphyed!" and "Murphy's World" were just a few of the possible
titles that I came up with for this week's commentary. I finally settled
on "Murphy of Arabia". Murphy is that mythical sage, author of the dictum
"Everything that can go wrong, will go wrong". This mantra seems to have
taken charge of the Bush administration's run-up to war... and practically
everything else it touches. Alliances that have lasted for decades... some
for centuries (France) have been trashed. It is still premature to talk
about "regime change" in Iraq, but in Britain it may be days away if British
troops attack without a second United Nations resolution. It goes on and
on. Any chance of salvaging this disaster now depends on two factors. The
first: a relatively small Anglo-American army, one-third the size of the
force that liberated Kuwait in the first Gulf War, must execute a near
perfect military ballet in a country the size of France with a population
of 23 million people. The second factor really should be the first as the
first is predicated on it: total contempt for the Iraqis. It is postulated
that they will not stand and fight in significant numbers to defend their
homeland against an invasion by an army of 'pork eating' kaffirs (infidels)
who have kept them, their wives and children at starvation point for the
last twelve years. A respected military analyst William Lind reports that
the Pentagon civilian planners are "so confident that the Iraqis will
not fight that our operational plan depends on them not doing so."
Murphy is always hovering over the affairs of mice and men, but he seems
to lavish extra attention on the over-optimistic and those who hold their
enemies in contempt. I find myself feeling very skeptical that the US armed
forces should be totally immune from the general trend of huge cock-ups
that America has experienced recently. To think that the armed forces of
a country are isolated and immune from the malaise and corruption of the
surrounding society is a 'banana republic' mentality. The last months have
abounded in respected institutions that have been "weighed in the balances,
and found wanting". The implosion of Enron and the demise of Arthur Andersen
led off a daisy chain of corporate scandals having at their root dishonest
practices disregarding the health of the companies in question, their employees
and their shareholders. The tragic, fiery disintegration of NASA's flagship
"Columbia" with its disquieting implications for the US aerospace technology
that is the base for the "smart bombs", the technology that is to "Shock
and Awe" the hapless Iraqis. In the military too, a major scandal is breaking
at this most inopportune time. It appears that a majority of the women
cadets at the United States Air
Force Academy are subject to sexual assault (rape). The general implications
for the organizational health of an institution that has tolerated such
abuse of its members since 1975 are staggering. This is the institution
that trains many of the leaders on whom the success of the war on Iraq
depends. The recent war in Afghanistan is often cited as an example of
US military prowess, but most of the ground fighting was carried out by
a mixture of the 'Northern Alliance' and the bribing of warlords. In my
opinion there was only one defining moment where the American infantry
was presented with a challenge relevant to the invasion of Iraq: the attack
on Tora Bora. Osama bin Laden was positively located in those mountains
defended by what could be described as light infantry armed only with mortars,
shoulder fired rocket launchers and machine guns: without heavy artillery
or armor. American public opinion would have accepted heavy casualties
at that time in order to lay hands "dead or alive" on the man who had ordered
the destruction of the World Trade Center. The British Royal Marine Commandos
in the sector were eager to make the assault: that was, in my opinion,
one of the most defining moments in US military history. The US Army Command,
however, dithered and dallied and finally used "soldiers" supplied by a
local warlord who it appeared took bribes in order let Osama bin Laden
escape. Were US commanders unsure of their troop's ability under fire?
I am skeptical, I confess. It was the Book of Ecclesiastes, but it could
have been Murphy who warned, "The race is not to the swift nor the battle
to the strong ... But time and chance happeneth to them all."
David Seaton
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| Uncertainty
of War Unsettles Oil Industry (New York Times)
For months, the Organization of the Petroleum Exporting Countries has scrambled, with little success, to keep a lid on oil prices. With war threatening as the cartel's ministers meet in Vienna this week, prospects for the global economy are so cloudy, analysts say, there is not much left for OPEC to do. The oil producers are not alone in their plight. Around the world, and especially in the United States, the dilemma of planning for the unknowable is upsetting the decisions of consumers, businesses and investors. That is hampering an economy struggling to better last year's meager growth, weighing on stock prices and subduing consumer spending. Oil is a significant component of all those calculations. Crude oil prices have hit their highest levels since the Persian Gulf war of 1991, and Standard & Poor's estimates high energy prices have cost the economy $50 billion in consumer purchasing power, or 0.5 percentage point of growth, just since last fall. The Energy Department predicts that by April, consumers will be paying record-high prices for gasoline in much of the country. In any effort to assess how prices will move — and how the economy will react — the echoes of history are inescapable. Just like in the fall of 1990, the massing of American troops near Iraq and fears that oil supplies from the Persian Gulf will be disrupted have lifted the price of oil well above $30 a barrel for weeks. But most of the similarities end there, according to industry analysts. While few experts expect a war to lead to shortages of oil, most doubt there will be a replay of the events of the gulf war. A dozen years ago, analysts noted, the world was awash in oil. Prices were less than $20 a barrel when Iraq invaded Kuwait in 1990. They began to climb when the United Nations imposed an embargo on Iraqi and Kuwaiti oil, removing a bit more than 7 percent of global oil supplies, according to Leonidas P. Drollas, the chief economist with the Center for Global Energy Studies, a London research firm. Click here to read more Contents |
| War
and its possible effects on oil (MSNBC News)
With global inventories reaching dangerously low levels, crude oil approached the feared $40-per-barrel mark in the trading week of Feb. 24-28, while futures markets gyrated in some of the wildest action traders had ever seen. Heating-oil, gasoline, and natural-gas prices in the U.S. also hit near-record highs before falling back a bit. “There has been genuine chaos,” says Peter A. Gignoux, head of the oil desk at Citigroup in London. Is the chaos justified? Not if you believe this optimistic scenario: After the U.S. delivers a quick knockout blow to Saddam, prices decline swiftly and uncertainty evaporates. A U.S. victory in Iraq would instantly wipe away a war premium of at least $5 per barrel, analysts figure, and prices would drift down further not long after that. “I personally feel that the price is going to fall,” says Leo P. Drollas, deputy executive director and chief economist of the Center for Global Energy Studies, a London think tank. “The war is going to be short and won’t have much impact in terms of the oil market unless Saddam goes for some outrageously bizarre self-sacrificial act.” There’s more roiling the oil markets and driving up prices than the prospect of war, however, which is why the outcome may not unfold quite as smoothly or swiftly as the optimists hope. Supplies are tight, and may get tighter still, for a host of reasons investors may only be dimly aware of. Claude Mandil, director of the International Energy Agency in Paris, which is responsible for making sure consuming countries have adequate energy supplies, ticks them off. First is Venezuela. After a devastating strike, it’s still producing far below its previous output, and it may not come back for months or years, if ever. No. 2 is Nigeria. It’s facing turbulent elections, and violence could spread to the oil fields. Then there’s Japan. The country has shut down some reactors for safety checks and may soon need a lot more oil. “There are a lot of ifs,” says Mandil. Click here to read more Contents |
| Oil
war: 23 years in the making War about power and oil (Toronto Star)
(...)Before turning to the combat debut of bombs that weigh about 9,000 kilos and can take out an entire battalion, consider why the United States is going to war. Consider who drew up U.S. goals and objectives in the Persian Gulf, when, and why. This particular operation — Pentagon working title: "OpPlan 10-03-Victor" — has been on the drawing board for a year, according to defence officials. The immediate goal is disarming Iraq and getting rid of Saddam. It's expected to begin soon, this week or next. Hard to hold back more than 300,000 U.S. and British troops, in place and pumped to go. But the long-term goal, say big-picture analysts, has been in the works for far more than the 23 years since former U.S. president Jimmy Carter linked American security — "the vital interests of the United States'' — to the Persian Gulf and its oil, and threatened military intervention. This war, say analysts, is about power and oil. It's about control of the Gulf states by means of strategic Iraq and, by extension, a final post-Cold War shakeout to give the U.S. more economic clout over China and Russia by controlling the oil spigot. This is the moment, Thomas Barnett, from the U.S. Naval War College, wrote recently in Esquire magazine, "when Washington takes real ownership of strategic security in the age of globalization.'' The Persian Gulf has the world's biggest oil reserves. After Saudi Arabia, Iraq has the second-largest proven reserves. "The only precedent to what is shaping up now is the Roman Empire,'' says Michael Klare, professor of peace and world security studies at Hampshire College. "There is only one power. I don't think Britain, France or Spain even came close in other centuries to the United States today. Click here to read more Contents |
| Gauging
Promise of Iraqi Oil (Los Angeles Times)
Maybe it's a coincidence, but American and British oil companies would be long-term beneficiaries of a successful military offensive led by the United States and Britain to remove Iraqi President Saddam Hussein. Industry officials say Hussein's ouster would help level the playing field for U.S. and British firms that have been shut out of Iraq as Baghdad has negotiated with rivals from other countries — notably France, Russia and China, three leading opponents of war. A post-Hussein Iraq also would be a bonanza for the U.S.-dominated oil-services industry, which is in the business of rehabilitating damaged infrastructure, reversing declining output from aging fields and providing essential support work to drillers and explorers. A leader in that industry is Halliburton Co., where Dick Cheney was chief executive before becoming vice president. The confluence of foreign policy objectives and commercial interests is fueling suspicions that U.S. and British war plans are motivated in part by a thirst for Iraqi oil. Those concerns would be magnified, experts caution, if Washington winds up calling the shots in a postwar Baghdad. "All over the world, people will be watching very carefully," said Issam Al-Chalabi, who ran Iraqi National Oil Co. for four years and served as Hussein's oil minister for three. "Even if they give only 10% of the work to Americans, people will say the Americans are being favored if there is supervision by the United States," said Al-Chalabi, now a consultant in Amman, Jordan. "But let the Iraqis decide, and no one can say they've been under pressure, even if they give 50% to American companies." Click here to read more Contents |
| China
sees Caspian oil as alternative to Mideast (International Herald Tribune)
China's state-controlled offshore oil company said Friday that it would buy a $615 million stake in a vast oil field in the Caspian Sea, marking China's boldest move yet to slow its rapidly growing dependence on oil from the politically volatile Gulf. Diplomats from the United States, Russia, the European Union and the Middle East have been wrangling for years over whether oil from Central Asia should be exported to Western countries through additional pipelines passing through Russia, Turkey, Iran or Georgia. But the acquisition Friday by CNOOC Ltd. raises the prospect that considerable quantities of oil could flow east instead, through pipelines across Kazakhstan to China, where hundreds of new factories are being built and car sales are rising. With war looming in Iraq, Chinese officials have expressed growing concern about their economy's increasing reliance on the Gulf, which supplies 60 percent of China's oil imports. In addition to the deal, Beijing has begun efforts to build a strategic petroleum reserve and has made three sizable investments in Indonesian and Australian oil and gas fields in the past year. The transactions have prompted some alarm in Washington. A panel appointed by Congress warned last summer that China was attempting to expand its influence in oil-producing countries to secure reliable access to energy supplies. But the panel was mostly concerned that China was developing links to countries that, unlike Kazakhstan, have been accused of sponsoring terrorism, like Iraq, Iran and Sudan. CNOOC, the publicly traded subsidiary of the state-owned China National Offshore Oil Corp., said it was paying cash for one-twelfth, or 8.33 percent, of the North Caspian Sea Project. Click here to read more Contents |
| Oil's
curse and blessing (Guardian)
Oil: it means horrendous air pollution, especially on days like yesterday, when the wind blows up a sandstorm and the thick air holds petrol fumes and plasters the stink of them onto your skin. It means the devastation of swathes of marine ecosystems. In Britain, it means roadbuilding and the loss of woodland ecosystems, open space and fresh air. It means war, power and refugees in countries all over the world: Iraq, Sudan, Cyprus, Nigeria. At Mosfa Daura, it means a living and a community. There are about 70 houses in the small company town that extends out of the Daura oil refinery, as well as a school, a kindergarten, a playground and a few shops for the oil workers and their families. This is not the most attractive neighbourhood in the world, but the children play safely in the street, and everyone knows each other. Zainab, Shems (which translates as sun) and Israa are 21-year-old students of biology, computer science and maths respectively at Baghdad University. Zainab's father is Mosfa Daura's dentist; Shems' and Israa's work as engineers in the refinery. They conferred in Arabic for the right English words, and also taught me a few Arabic phrases. Zainab explained that she wants to work in a hospital laboratory when her degree is finished. Shems plans to work in a computer programming office. Zainab pointed out the house, across the street from where we were standing, in which she used to live. During the 1991 Gulf war, the oil refinery was hit. She made a gesture, trying to find the words to describe stinging eyes and choking air. "Smoke?" I suggested. "Yes, yes," she said. "Smoky." She shook her head. "We live closer to the road now." Click here to read more Contents |
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